The largest generational wealth transfer in U.S. history is already underway, and it’s something families across the country need to plan for in advance. Many beneficiaries inherit both financial assets and a long-standing relationship with their parents’ financial advisor. While some continue working with the same financial advisor after inheritance, many choose to seek new financial guidance that is better suited to their personal needs and situation. With modern expectations for communication and financial planning, switching financial advisors can often be a sensible move. Still, there are many things heirs need to consider before making a change to determine whether it’s the right decision. Let’s discover why heirs might change financial advisors after inheritance and how to make the right choice for your financial future.
Why Many Heirs Choose a New Financial Advisor
One of the most common reasons that heirs choose a new financial advisor after inheritance is that they never established a personal relationship with the advisor. This may be due to living in a different part of the country or simply taking little interest in their parents’ finances. Younger generations often have very different financial goals, risk tolerance, and priorities compared to previous generations, leaving them to seek guidance and support that is more aligned with their future goals.
Before making important financial decisions, they may want a second opinion to determine whether the approach is right for them and not just what their parents may desire. This is often coupled with modern expectations for communication, technology, and financial planning that may also influence their decision to work with a new financial advisor after inheritance. By researching your options instead of just going with the easy route of sticking with your parents’ financial advisor, you can put yourself in a better position for the future in a way that aligns with your vision for your life and finances.
Mistakes to Avoid After Inheriting Wealth
After inheriting wealth, one of the biggest mistakes we see heirs make is rushing to make investment decisions based on emotions or pressure to act quickly. Your inherited assets should be spent or invested as part of a long-term financial plan, which is why we always recommend seeking the support of a financial advisor after inheritance. The money you inherit is something you should use to support yourself and your family for the rest of your life, and you should go into any spending decisions with that mindset instead of making impulsive choices you may regret a few years down the line.
When making decisions about what to do with your inheritance, you must think about the tax implications. Ignoring these or required account distributions could leave you in legal trouble or in a difficult financial situation in the future. Failing to update estate planning and beneficiary designations are other mistakes we see heirs make, and working with a financial advisor after inheritance is a good way to reduce the likelihood of overlooking any of the legal and logistical procedures you need to follow during what can be a very difficult and overwhelming time for you and your family.
Choosing the Right Financial Advisor
When it comes to selecting a financial advisor after inheritance, take your time to understand what you’ve inherited before thinking about making any changes. As you start to consider your options, ask questions about investment strategy, fees, tax planning, and long-term goals to determine whether the advisor’s approach aligns with your personal financial goals and current financial planning strategies. Look for a fiduciary advisor who offers comprehensive financial planning, rather than someone who focuses only on investment management. We always recommend choosing someone you trust and feel comfortable working with for years to come. You want to be able to open up to this person about any concerns that may occur and feel confident that their approach supports your future financial milestones.
Preparing the Next Generation
One way in which families can plan and improve this transition is by introducing their heirs to their advisor before an inheritance occurs. This helps to improve communication during a challenging time and allows heirs to get more comfortable with the financial advisor. Regular family financial discussions can build trust and confidence and help everyone understand what to expect in the future. Open communication about your family’s wealth can support everyone’s financial planning and help keep family members aligned with your wishes.
A proactive wealth transfer plan can help to preserve both family relationships and financial stability. We know that many families struggle with these conversations, but a financial advisor can support you, if needed, to facilitate these discussions at appropriate intervals. Don’t keep putting off these conversations, as unfortunately, we never know when situations may change, and everyone should be equipped with the information they need to protect your family’s wealth.
Changing financial advisors after an inheritance isn’t necessarily the wrong decision. Still, it should be one you take the time to think about carefully so you can make an informed choice for yourself and your family. Whether you continue working with your family’s advisor or choose someone new that you feel is a better fit, the most important factor is finding someone who understands your goals and can help you preserve and grow your inherited wealth. By taking the time to ask questions and discuss your personal financial situation, you’ll be able to discover if a financial advisor is a good match for you.
If you’ve recently inherited assets or want to prepare your family for a future wealth transfer, contact Howland and Associates to discuss a personalized financial strategy. Our team will be here to answer any questions you have about changing financial advisors after inheritance and support you through this process.